memorandum - City of Vancouver

Jul 18, 2016 - The total development will be 72,948 square feet and development costs (excluding land) are projected to be $22,243,173. The developer is ...
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MEMORANDUM To:

Eric Holmes, City Manager

From:

Peggy Sheehan, Community Development Programs Manager

Date:

7/18/2016

Re:

Two Multi-family Tax Exemption Program Applications

Staff has received Multi-family Tax Exemption Program applications for two projects: 1. Block 6 at the Waterfront (8-year exemption) 2. Hutton Block (12-year exemption) Both projects will be reviewed during a City Center Redevelopment Authority (CCRA) meeting on July 21. The Council public hearing is scheduled for August 15th. Background: Since 1997 the City has used the Multi-Family Housing Tax Exemption Program authorized under Vancouver Municipal Code (VMC) 3.22. This program allows for an eight or twelve year tax exemption for developments in two areas of the City, the Vancouver City Center Vision (VCCV) Subarea and the Fourth Plain Corridor Subarea. To be eligible for the twelve year exemption the development must provide 20 percent of the units to households earning up to 115% of area median income. To date, 13 projects have been approved for the Multi-Family Housing Tax Exemption Program. Five projects are complete and one is currently under construction. The general intent of Multi-family Tax Exemption Ordinance is to encourage development that provides places to live close to employment, shopping, entertainment and transit services and encourage affordable housing opportunities. In addition to the expected outcomes, applying the ordinance to these specific projects will have a beneficial effect by means of: • Promoting development activity to meet current housing needs. • Allowing development of vacant/underutilized sites. • Encouraging development on difficult-to-develop parcels. • Providing an affordable housing component (Hutton Block). • Providing construction employment opportunities. • Providing new development in a low/moderate income neighborhood.

Multi-Family Tax Exemption Program Block 6 at the Waterfront Location – 655 West Columbia Way, Vancouver, WA 98660 Developer – Gramor Development Project Description This project is a 6 story, mixed-use building located on Vancouver’s waterfront at 655 West Columbia Way. The project includes 6,564 feet of ground-floor commercial space and 53 units of market-rate rental apartments (mix of 1, 2, and 3-bedroom units, and penthouse suites). The total development will be 72,948 square feet and development costs (excluding land) are projected to be $22,243,173. The developer is applying for an 8-year tax exemption. Proposed rents are as follows: Unit Type

# of Units

Unit Sq. Ft.

3

Monthly Rent $1,726

Entry-level 1Bedroom 1-Bedroom 2-Bedroom 3-Bedroom Penthouse

19 20 9 2

$2,167 $2,925 $3,709 $3,641

811 1,094 1,388 1,363

Rent/Sq. Ft.

646 $2.67

Financial Information - Analysis based on preliminary budgets and cash flow projections. Information is considered confidential and not for public disclosure. In addition, the financial evaluation is not a condition for approval of the tax exemption. 

Debt Coverage Ratio (DCR): Equal to estimated annual net operating income divided by estimated annual debt service. The DCR is the primary measure to determine if a property will be able to sustain its debt payments based on cash flow. A debt coverage













ratio over 1.25 suggests the developer could obtain financing for the amount of proposed debt. o City reference for analysis: ~1.25 o For this project: 1.13 with exemption Development Fee: The amount of development fees represented as a percentage of total development cost. o City reference for analysis: ~4.0% o For this project: 2.49% Development Yield: Equal to estimated annual net income before debt service divided by the estimated total development cost. This measures the annual rate of retur